U.S. Factory Gauge Cools More Than Forecast, Imports Tumble

A key gauge of U.S. manufacturing retreated to near-stagnation in February amid mounting concern that the world's largest economy won't be able to dodge a hit from the coronavirus.

The Institute for Supply Management index slid to 50.1 from 50.9 a month earlier, according to data Monday that showed a steeper drop than economists surveyed by Bloomberg projected. Three of five components fell, led by the biggest drop in production since 2018.

The factory gauge clinging just above 50, the dividing line between expansion and contraction, follows January's surprisingly strong rebound that snapped a five-month string of shrinking activity. Coronavirus concerns flaring around the globe will test just how durable that figure can be amid supply-chain disruptions and weaker production.

Other purchasing managers' indexes for manufacturing in Asia took a tumble, with a severe contraction in activity in China driving down output across the region.

The ISM data showed that declines in the components tracking U.S. production, new orders and inventories were somewhat offset by the employment measure hitting a four-month high.

The gauge of supplier deliveries also rose to the highest level since 2018 -- indicating slower delivery times that may be due to supply disruptions from the coronavirus. The imports index swung into contraction, falling the most on record to 42.6, the lowest reading since 2009. Export orders grew at a slower pace.

Another U.S. factory gauge, produced by IHS Markit, fell to the lowest since August. The final measure for February dropped to 50.7 from 51.9 a month earlier.

As business reopenings picked up nationwide, Americans filed nearly 2 million applications for unemployment benefits last week, reflecting a slowing -- though far from a halt -- in job losses.
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